Published on: 2026-09-24
Source: United Nations – United Nations –
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September 24, 2026 Economic Development
A new report by the United Nations Conference on Trade and Development (UNCTAD) documents the loss of decades of development achievements, economic collapse in Gaza, and increased economic restrictions in the West Bank.
The cost of restoration and reconstruction work in Gaza is estimated at $71.5 billion. This is stated in the latest UNCTAD report on aid to the Palestinian people. The document details the collapse of Gaza’s economy, the tightening restrictions on economic activity in the West Bank, and the increasing pressure on Palestine’s public finances and banking sector.
The report notes that 59 years of occupation have constrained the development of the Palestinian economy, and structural and economic costs have sharply increased since October 2023. After a sharp decline, Palestine’s GDP grew by 4.3 percent in 2025 but still remained 20 percent below the 2022 level. Gaza’s real GDP increased by 34.2 percent after a reduction of 83 percent in 2024. Hundreds of thousands of jobs have been lost across the occupied Palestinian territory since October 2023, leading to an approximate loss of $2.8 billion in aggregate labor income.
In the West Bank, the report provides documented evidence of reduced access to land and natural resources linked to the expansion of settlements. It also reports an increase in the scale of population displacement: since 2023, 38 Palestinian communities have been completely abandoned, and the scale of displacement in the first quarter of 2026 exceeded the total figure recorded for the entire year of 2025.
Fiscal pressure
The report notes that the state of Palestine’s public finances has sharply deteriorated. In accordance with the Paris Protocol, Israel collects more than two-thirds of Palestinian budget revenues on behalf of the Palestinian government. Transfers were irregular and subject to deductions. According to the report, the transfer of revenues from customs clearance receipts owed to the Palestinian government was completely suspended from May 2025 to mid-2026.
The total amount of deductions and withheld income from January 2019 to March 2026 has exceeded, according to estimates, $3.67 billion at exchange rates effective at the time payments were due, equivalent to 83 percent of Palestine’s total net income in 2025. The report estimates the budget deficit in 2025 at 13 percent of GDP. If all scheduled payments were made, this figure would amount to only six percent.
This fiscal pressure limits the provision of vital services. By the end of 2025, healthcare-related debt exceeded one billion dollars. Such a situation undermines the operation of hospitals and other institutions.
According to the report, on the West Bank, a shortage of resources led schools in 2025 to restrict in-person learning to three days a week.
Risks to the banking sector
To finance the deficit, the government increasingly borrowed from domestic banks and accumulated debt to private sector suppliers and the pension fund, resulting in a total government debt reaching 4.8 billion dollars in 2025. Combined with lending secured by government payrolls, this led to the banking system’s exposure to risks related to the public sector amounting to 5.3 billion dollars, or 42 percent of all bank lending.
According to the report, the short validity period of letters of guarantee issued by the Israeli authorities affects correspondent banking relationships and access to global trade and financing. Palestinian banks also face restrictions in converting physical shekel banknotes into digital fund balances due to currency repatriation limitations. Taken together, these restrictions may disrupt financing for the import of fuel, medicines, and food.
Economic crisis in Gaza
According to the report’s authors’ estimates, since October 2023, 92 percent of Gaza’s economic enterprises have been damaged or destroyed. GDP per capita was $212 in 2025, equivalent to approximately $0.58 per person per day in terms of GDP, and represents 17 percent of the 2022 level. The unemployment rate reached 78 percent, with more than 90 percent of the working-age population unemployed.
Gaza’s share of Palestine’s GDP decreased from 17.4 percent until October 2023 to less than four percent in 2025.
All industrial sectors in Gaza remained significantly below 2022 production levels: output in agriculture and industry fell by 94 percent, and in construction by 99 percent, the report states.
In 2025, the overall price level in Gaza remained 274 percent higher than in 2022, with the cost of basic goods such as potatoes and household gas exceeding 2022 prices by several times.
Needs for reconstruction and restoration
According to the rapid damage and needs assessment conducted by the World Bank, the European Union, and the United Nations, as of early 2026, the damage to Gaza’s physical infrastructure was estimated at $35.2 billion, with economic and social losses amounting to $22.7 billion. Separately, the total recovery and reconstruction needs are estimated at $71.5 billion. This figure may increase as further damage is documented.
The housing sector constitutes the largest category of damage and the greatest need for reconstruction. The assessment reports extensive damage to educational and medical institutions, with more than half of hospitals and primary healthcare facilities non-operational. Less than 1.5 percent of Gaza’s agricultural land remained accessible and undamaged, increasing dependence on humanitarian food aid.
The report notes that recovery and reconstruction across the entire occupied Palestinian territory will require substantial international financial and technical assistance. As a key condition for recovery, going beyond a return to conditions existing prior to October 2023, the restoration of production capacity in agriculture, industry, construction, energy, and the technology sector is highlighted.
The report identifies three urgent priorities: the transfer of withheld Palestinian revenues, ensuring the resilience of the banking system, and aligning reconstruction support with the documented scale of damage and economic losses.
Please note; This information is raw content obtained directly from the source of information. It is an accurate report of what the source claims and does not necessarily reflect the position of MIL-OSI or its clients.